Abraham Maslow once said, “If the only tool you have is a hammer, it is tempting, to treat everything as a nail.” For advisors focused on investment selection, acting as a co-suffix and helping plan sponsors limit fees, the world of defined contributions seems simple.
Yet they are missing out on a great opportunity to differentiate themselves, increase revenue, and actually help their customers.
A recent training program for consultants serving as assistant lecturers at the planning sponsoring university today highlighted the top three pain points:
- great resignation
- Engaging a Remote Workforce
- Helping employees understand and navigate the benefits offered at the workplace
The triple Fs of fees, funds and fiduciaries, although significant, have been commoditized. Focusing on these new pain points will create an emotional connection because it shows that the advisor understands the day-to-day issues many plan sponsors are currently working on as well as an opportunity to move retirement from strategic to strategic advantage. is also.
With the war for talent looming, employers are focusing on using benefits to retain and recruit workers—defined contribution plans are the highest-rated financial benefits, which can become a valuable weapon if designed properly. Is. Workplace retirement platforms and communications can be used to engage remote workers, and these platforms are the perfect way to add helpful benefits like student loan repayment and emergency savings plans.
Although financial wellness is usually at the top of the list of what plans sponsors want, it is hard to define. Ask 10 people what financial wellness means and you may get 10 different answers. The best financial wellness tool is one that helps each employee understand the benefits offered at work, customizing them based on the worker’s family and financial situation.
It is also tempting to repeat the latest trends that echo in the 401(k) echo chamber such as ESG funds, managed accounts and pooled employer plans that may be important to some plan sponsors but not solve essential, strategic issues. We do.
Some retirement planning advisors may be tempted to just stay in their lane and offer triple Fs and, while they may receive a good response, it leaves the door open for others to step in their place. There are tools any advisor can buy relatively cheaply that do money analysis; Third parties such as Morningstar as well as thousands of other advisors are willing to act as co-contractors; And the focus on fees can leave advisors vulnerable to cheaper options that reduce their value.
Successful consultants with the right tools and training have shifted the focus from plan-level services to participant or, better said, employee services, where the opportunity to generate fees is enormous. Currently, RPAs are in a good position to help employers tackle their top three pain points, all focused on workers.
Because if you don’t address these issues, no doubt a competitor will.
Fred Barstein is the founder and CEO of TRAU, TPSU and 401kTV.